Question: Arasibo Computers buys integrated chips at $ 350 per chip. Storage cost is 10% of cost per unit per year, ordering cost is $ 120

Arasibo Computers buys integrated chips at $ 350 per chip. Storage cost is 10% of cost per unit per year, ordering cost is $ 120 per order, and sales are stable at 400 monthly. The company's supplier, AMInteD LTD, decides to offer price discounts in order to attract larger orders. The pricing structure is shown below.

quantity to buy	Cost per unit
1-99 units	$350.00
100-199 units	$325.00
200 or more units	$300.00

What is the optimal order quantity and what is the optimal annual cost?

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